AGREEMENT AND PLAN OF MERGER
among
BIOMET, INC.,
LVB ACQUISITION, LLC
and
LVB ACQUISITION MERGER SUB, INC.
Dated as of December 18, 2006
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated as
of December 18, 2006, among Biomet, Inc., an Indiana corporation (the "Company"),
LVB Acquisition, LLC, a Delaware limited liability company ("Parent"), and LVB Acquisition
Merger Sub, Inc., an Indiana corporation and a wholly owned subsidiary of Parent
("Merger Sub"). The Company and Merger Sub are sometimes hereinafter collectively
referred to as the "Constituent Corporations".
RECITALS
WHEREAS, the parties to this Agreement desire to effect the acquisition of the
Company by Parent through a merger of the Company and Merger Sub;
WHEREAS, in furtherance of the foregoing and in accordance with the Indiana Business
Corporation Law (the "IBCL") and the Delaware Limited Liability Company Act, as
the case may be, the respective boards of directors of each of Parent, Merger Sub
and the Company have unanimously approved the Agreement, the merger of Merger Sub
with and into the Company with the Company as the Surviving Corporation (the "Merger")
and the transactions contemplated hereby upon the terms and subject to the conditions
set forth in this Agreement and have adopted and declared advisable this Agreement;
WHEREAS, the board of directors of the Company has approved in advance the transactions
contemplated by this Agreement for purposes of the provisions of Section 23-1-43
of the IBCL;
WHEREAS, concurrently with the execution of this Agreement, and as a condition
to the willingness of the Company to enter into this Agreement, each of Blackstone
Capital Partners V L.P., Goldman Sachs Investments Ltd., KKR 2006 Fund L.P. and
TPG Partners V, L.P. (collectively, the "Guarantors") is entering into a guarantee
with the Company (each a "Guarantee") pursuant to which each Guarantor is guaranteeing
its pro rata portion of certain obligations of Parent and Merger Sub in connection
with this Agreement; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the IBCL, Merger Sub shall be merged with and
into the Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as
the surviving corporation in the Merger (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Merger Sub in accordance
with the Section 23-1-40-6 of the IBCL.
1.2. Closing. Unless otherwise mutually agreed in writing between the Company
and Parent, the closing for the Merger (the "Closing") shall take place at the offices
of Kirkland & Ellis LLP, Citigroup Center, 153 East 53rd Street, New York, New York,
at 10:00 a.m. (Eastern Time) on the second business day following the day on which
the last to be satisfied or waived of the conditions set forth in ARTICLE VII (other
than those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions) shall be satisfied or
waived in accordance with this Agreement; provided that, notwithstanding the satisfaction
or waiver of the conditions set forth in ARTICLE VII, the parties shall not be required
to effect the Closing until the earliest of (a) a date during the Marketing Period
specified by Parent on no less than three business days notice to the Company,
(b) the final day of the Marketing Period and (c) the Termination Date, subject
in each case to the satisfaction or waiver of all the conditions set forth in ARTICLE
VII as of the date determined pursuant to this proviso (the date on which the Closing
occurs pursuant to this Section 1.2, the "Closing Date"). For purposes of this Agreement,
the term "business day" shall mean any day ending at 11:59 p.m. (Eastern Time) other
than a Saturday or Sunday or a day on which banks are required or authorized to
close in the City of New York.
1.3. Effective Time. Subject to the provisions of this Agreement, as soon as
practicable on the Closing Date, the Surviving Corporation shall file with the Secretary
of State of the State of Indiana articles of merger (the "Articles of Merger") executed
and acknowledged by the parties in accordance with the relevant provisions of the
IBCL and, as soon as practicable on or after the Closing Date, shall make all other
filings or recordings required under the IBCL. The Merger shall become effective
upon the filing of the Articles of Merger with the Secretary of State of the State
of Indiana, or at such later time as Parent and the Company shall agree and shall
specify in the Articles of Merger (the time the Merger becomes effective being the
"Effective Time").
ARTICLE II
Articles of Incorporation and Bylaws of the Surviving Corporation
2.1. The Articles of Incorporation. The articles of incorporation of the Company
shall be amended as of the Effective Time as a result of the Merger so as to read
in its entirely as the articles of incorporation of Merger Sub (except that ARTICLE
I thereof shall be amended to read "The name of the Corporation is Biomet, Inc.")
and, as so amended, shall be the articles of incorporation of the Surviving Corporation
(the "Charter"), until duly amended as provided therein or by applicable Laws.
2.2. The Bylaws. The parties hereto shall take all actions necessary so that
the bylaws of the Company in effect immediately prior to the Effective Time shall
be the bylaws of Merger Sub (the "Bylaws"), until thereafter amended as provided
therein or by applicable Laws.
ARTICLE III
Officers and Directors of the Surviving Corporation
3.1. Directors. The parties hereto shall take all actions necessary so that the
board of directors of Merger Sub at the Effective Time shall, from and after the
Effective Time, be elected or otherwise validly appointed as the directors of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Charter and the Bylaws.
3.2. Officers. The officers of the Company at the Effective Time shall, from
and after the Effective Time, be the officers of the Surviving Corporation until
their successors shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Charter and the
Bylaws.
ARTICLE IV
Effect of the Merger on Capital Stock; Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, as a result of the Merger
and without any action on the part of the holder of any capital stock of the Company:
(a) Merger Consideration. Each share of the common stock, without par value,
of the Company (a "Share" or, collectively, the "Shares") issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent, Merger
Sub or any other direct or indirect wholly owned subsidiary of Parent and Shares
owned by the Company or any direct or indirect wholly owned subsidiary of the Company
(each, an "Excluded Share" and collectively, the "Excluded Shares")) shall be converted
into the right to receive $44.00 per Share in cash, less any required withholding
Taxes as described in Section 4.2(f) and without interest (the "Per Share Merger
Consideration"). At the Effective Time, all of the Shares shall cease to be outstanding,
shall be cancelled and shall cease to exist, and each certificate (a "Certificate")
formerly representing any of the Shares (other than Excluded Shares) shall thereafter
represent only the right to receive the Per Share Merger Consideration, without
interest.
(b) Cancellation of Excluded Shares. Each Excluded Share referred to in
Section 4.1(a) shall, by virtue of the Merger and without any action on the part
of the holder thereof, cease to be outstanding, shall be cancelled without payment
of any consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of common stock, without
par value, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into one share of common stock, without par value, of the
Surviving Corporation.
4.2. Exchange of Certificates.
(a) Paying Agent. At the Effective Time, Parent shall deposit, or shall
cause to be deposited, with a paying agent selected by Parent with the Companys
prior approval (such approval not to be unreasonably withheld or delayed) (the "Paying
Agent"), for the benefit of the holders of Shares, a cash amount in immediately
available funds necessary for the Paying Agent to make payments under Section 4.1(a)
(such cash being hereinafter referred to as the "Exchange Fund"). The Paying Agent
shall invest the Exchange Fund as directed by Parent; provided that such investments
shall be in obligations of or guaranteed by the United States of America, in commercial
paper obligations rated A-1 or P-1 or better by Moodys Investors Service, Inc.
or Standard & Poors Corporation, respectively. Any interest and other income resulting
from such investment shall become a part of the Exchange Fund, and any amounts in
excess of the amounts payable under Section 4.1(a) shall be promptly returned to
the Surviving Corporation. To the extent that there are losses with respect to any
such investments, or the Exchange Fund diminishes for any reason below the level
required to make prompt cash payment under Section 4.1(a), Parent shall, or shall
cause the Surviving Corporation to promptly replace or restore the cash in the Exchange
Fund so as to ensure that the Exchange Fund is at all times maintained at a level
sufficient to make such payments under Section 4.1(a).
(b) Exchange Procedures. Promptly after the Effective Time (and in any
event within five business days), the Surviving Corporation shall cause the Paying
Agent to mail to each holder of record of Shares (other than holders of Excluded
Shares) (i) a letter of transmittal in customary form specifying that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates (or affidavits of loss in lieu thereof as provided
in Section 4.2(e)) to the Paying Agent, such letter of transmittal to be in such
form and have such other provisions as Parent and the Company may reasonably agree,
and (ii) instructions for use in effecting the surrender of the Certificates (or
affidavits of loss in lieu thereof as provided in Section 4.2(e)) in exchange for
the Per Share Merger Consideration. Upon surrender of a Certificate (or affidavit
of loss in lieu thereof as provided in Section 4.2(e)) to the Paying Agent in accordance
with the terms of such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a cash amount in immediately
available funds (after giving effect to any required Tax withholdings as provided
in Section 4.2(f)) equal to (A) the number of Shares represented by such Certificate
(or affidavit of loss in lieu thereof as provided in Section 4.2(e)) multiplied
by (B) the Per Share Merger Consideration, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on any amount payable
upon due surrender of the Certificates. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a check
for any cash to be exchanged upon due surrender of the Certificate may be issued
to such transferee if the Certificate formerly representing such Shares is presented
to the Paying Agent, accompanied by all documents reasonably required to evidence
and effect such transfer and to evidence that any applicable stock transfer taxes
have been paid or are not applicable.
(c) Transfers. From and after the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any Certificate is presented
to the Surviving Corporation, Parent or the Paying Agent for transfer, it shall
be cancelled and exchanged for the cash amount in immediately available funds to
which the holder thereof is entitled pursuant to this ARTICLE IV.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund (including
the proceeds of any investments thereof) that remains unclaimed by the shareholders
of the Company for 180 days after the Effective Time shall be delivered to the Surviving
Corporation. Any holder of Shares (other than Excluded Shares) who has not theretofore
complied with this ARTICLE IV shall thereafter look only to the Surviving Corporation
for payment of the Per Share Merger Consideration (after giving effect to any required
Tax withholdings as provided in Section 4.2(f)) upon due surrender of its Certificates
(or affidavits of loss in lieu thereof as provided in Section 4.2(e)), without any
interest thereon. Notwithstanding the foregoing, none of the Surviving Corporation,
Parent, the Paying Agent or any other Person shall be liable to any former holder
of Shares for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar Laws. For the purposes of this Agreement,
the term "Person" shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture, estate,
trust, association, organization, Governmental Entity or other entity of any kind
or nature.
(e) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed and,
if required by Parent, the posting by such Person of a bond in customary amount
and upon such terms as may be required by Parent as indemnity against any claim
that may be made against it or the Surviving Corporation with respect to such Certificate,
the Paying Agent will issue a check in the amount (after giving effect to any required
Tax withholdings as provided in Section 4.2(f)) equal to the number of Shares represented
by such lost, stolen or destroyed Certificate multiplied by the Per Share Merger
Consideration.
(f) Withholding Rights. Each of Parent, Merger Sub, the Surviving Corporation
and the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares such amounts
as it is required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or any other applicable
state, local or foreign Tax Law. To the extent that amounts are so withheld, such
withheld amounts (i) shall be remitted by Parent, Merger Sub, the Surviving Corporation
or the Paying Agent, as applicable, to the applicable Governmental Entity, and (ii)
shall be treated for all purposes of this Agreement as having been paid to the holder
of Shares in respect of which such deduction and withholding was made by the Paying
Agent, Surviving Corporation, Merger Sub or Parent, as the case may be.
4.3. Treatment of Stock Plans.
(a) Options. At the Effective Time, each outstanding option to purchase
Shares under the Stock Plans, vested or unvested (a "Company Option"), shall be
cancelled and shall only entitle the holder thereof to receive, as soon as reasonably
practicable after the Effective Time (but in any event no later than three business
days after the Effective Time), an amount in cash equal to the product of (i) the
total number of Shares subject to the Company Option immediately prior to the Effective
Time multiplied by (ii) the excess, if any, of the Per Share Merger Consideration
over the exercise price per Share under such Company Option, less applicable Taxes
required to be withheld with respect to such payment.
(b) Corporate Actions. At or prior to the Effective Time, the Company,
the board of directors of the Company and the compensation and stock option committee
of the board of directors of the Company, as applicable, shall adopt resolutions
to implement the provisions of Section 4.3(a), it being understood that the intention
of the parties is that following the Effective Time no holder of any Company Option
or any participant in any Stock Plan or other employee benefit arrangement of the
Company shall have any right thereunder to acquire any capital stock (including
any phantom stock or stock appreciation right) of the Company, any Subsidiary or
the Surviving Corporation. The Company shall deliver to the holders of the Company
Options appropriate notices, at a time and in a form reasonably acceptable to Parent,
setting forth such holders rights pursuant to this Agreement.
4.4. Adjustments to Prevent Dilution. In the event that the Company changes the
number of Shares or securities convertible or exchangeable into or exercisable for
Shares issued and outstanding prior to the Effective Time as a result of a reclassification,
stock split (including a reverse stock split), stock dividend or distribution, recapitalization,
merger, issuer tender or exchange offer, or other similar transaction, the Per Share
Merger Consideration shall be equitably adjusted.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as set forth (i) in
(A) the Company Reports filed with the SEC from and after May 31, 2006 through and
including the date hereof or (B) the Form 8-K previously disclosed to Parent and
to be filed in connection with the announcement of this Agreement (but, in any case,
only to the extent (x) such disclosure does not constitute a "risk factor" or a
"forward-looking statement" under the heading "Forward-Looking Statements" in any
of such Company Reports and (y) the applicability of such disclosure to a section
or subsection of these representations and warranties is reasonably apparent) or
(ii) in the corresponding sections or subsections of the disclosure letter delivered
to Parent by the Company prior to entering into this Agreement (the "Company Disclosure
Letter") (it being agreed that disclosure of any item in any section or subsection
of the Company Disclosure Letter shall be deemed disclosure with respect to any
other section or subsection to which the relevance of such item is reasonably apparent)
the Company hereby represents and warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries is a legal entity duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation or similar
entity in each jurisdiction where the ownership, leasing or operation of its assets
or properties or conduct of its business requires such qualification, except where
the failure to be so organized, qualified or in good standing, or to have such power
or authority, would not, individually or in the aggregate, have a Company Material
Adverse Effect. As used in this Agreement, the term (i) "Subsidiary" means, with
respect to any Person, any other Person of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions is directly
or indirectly owned or controlled by such Person and/or by one or more of its Subsidiaries,
(ii) "Significant Subsidiary" is as defined in Rule 1.02(w) of Regulation S-X promulgated
pursuant to the Securities Exchange Act of 1934, as amended (together with the rules
and regulations promulgated thereunder, the "Exchange Act") and (iii) "Company Material
Adverse Effect" means an event, change, effect, development, condition or occurrence
(each a "Change") that is or reasonably would be expected to be, individually or
in the aggregate, materially adverse to (x) the ability of the Company to timely
perform its obligations under and consummate the transactions contemplated by this
Agreement or (y) the condition (financial or otherwise), business, assets, liabilities
or results of operations of the Company and its Subsidiaries taken as a whole; provided
that no Change to the extent resulting from the following shall constitute or be
taken into account in determining whether there has been or reasonably would be
expected to be a Company Material Adverse Effect under clause (x) or (y):
(A) changes in the economy or financial markets generally in the United States
or other countries in which the Company or any of its Subsidiaries conduct operations
or that are the result of acts of war or terrorism;
(B) general changes or developments in any industry in which the Company and
its Subsidiaries operate;
(C) any loss or threatened loss of, or adverse change or threatened adverse change
in, the relationship of the Company or any of its Subsidiaries with its customers,
partners, employees, financing sources or suppliers, or any change in the Companys
credit ratings, caused by the pendency or the announcement of the transactions contemplated
by this Agreement;
(D) (1) any restatement of the Companys financial statements or any delay in
filing periodic reports at the time required by the Exchange Act solely to the extent
resulting from the failure to (x) properly document the measurement date for any
stock option grant, (y) record stock option expense (or other items relating thereto)
in accordance with GAAP or (z) issue stock options in accordance with the terms
of any applicable Stock Plan (the failures described in clauses (x), (y) and (z)
being "Option Accounting Issues") or (2) any civil investigation or civil litigation
to the extent arising out of or relating to any Options Accounting Issues or applicable
Laws relating thereto (including the IBCL and the Exchange Act) or (3) any of the
"Potential Consequences" set forth in Section 5.1(e) of the Company Disclosure Letter
solely to the extent resulting from Option Accounting Issues;
(E) the failure by the Company to take any action prohibited by this Agreement;
(F) changes in any Law or GAAP or interpretation thereof after the date hereof;
(G) any failure by the Company to meet any estimates of revenues
or earnings for any period ending on or after the date of this Agreement in and
of itself; provided that the exception in this clause (G) shall not prevent or otherwise
affect a determination that any Change underlying or contributing to such failure
has resulted in, or contributed to, a Company Material Adverse Effect; and
(H) a decline in the price or trading volume of the Company
common stock on the NASDAQ Global Select Market (the "NASDAQ") in and of itself;
provided that the exception in this clause (H) shall not prevent or otherwise affect
a determination that any Change underlying or contributing to such decline has resulted
in, or contributed to, a Company Material Adverse Effect; unless, in the case of
the foregoing clauses (A), (B) and (F), such changes have a disproportionate effect
on the Company and its Subsidiaries, taken as a whole, when compared to other companies
operating in the same industries in which the Company or its Subsidiaries operate.
(b) Capital Structure. The authorized capital stock of the Company consists
of 500,000,000 Shares, of which 245,210,886 Shares were outstanding as of the close
of business on November 30, 2006, and 5,250 shares of preferred stock, none of which
were outstanding as of the date hereof. Since such date, the Company has not issued
any Shares other than the issuance of Shares upon the exercise of Company Options
outstanding on such date and since December 8, 2006, the Company has not issued
any Company Options other than ordinary course "anniversary grants" of Company Options
that are not, in the aggregate, material. All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and nonassessable. As of the
date of this Agreement, other than Shares reserved for issuance under the Biomet,
Inc. 1998 Qualified and Non-Qualified Stock Option Plan and the 2006 Equity Incentive
Plan (collectively, the "Stock Plans"), the Company has no Shares reserved for issuance.
Section 5.1(b) of the Company Disclosure Letter contains a correct and complete
list as of December 8, 2006 of options, restricted stock, performance stock units,
restricted stock units and any other equity or equity-based awards (including cash-settled
awards), if any, outstanding under the Stock Plans, including the holder, date of
grant, term, number of Shares and, where applicable, exercise price. Each of the
outstanding shares of capital stock or other equity securities of each of the Companys
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and
owned by the Company or by a direct or indirect wholly owned Subsidiary of the Company,
free and clear of any lien, charge, pledge, security interest, claim or other encumbrance
(each, a "Lien"). Except as set forth above, there are no preemptive or other outstanding
rights, options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or rights
of any kind that obligate the Company or any of its Subsidiaries to issue or sell
any shares of capital stock or other equity securities of the Company or any of
its Significant Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or acquire,
any equity securities of the Company or any of its Significant Subsidiaries, or
contractual obligations of the Company or any of its Subsidiaries to make any payments
directly or indirectly based (in whole or in part) on the price or value of the
Shares or preferred shares, and no securities or obligations evidencing such rights
are authorized, issued or outstanding. Upon any issuance of any Shares in accordance
with the terms of the Stock Plans, such Shares will be duly authorized, validly
issued, fully paid and nonassessable and free and clear of any Liens. The Company
does not have outstanding any bonds, debentures, notes or other obligations for
borrowed money the holders of which have the right to vote (or convertible into
or exercisable for securities having the right to vote) with the shareholders of
the Company or any of its Significant Subsidiaries on any matter. For purposes of
this Agreement, a wholly owned Subsidiary of the Company shall include any Subsidiary
of the Company of which all of the shares of capital stock of such Subsidiary other
than director qualifying shares are owned by the Company (or a wholly owned Subsidiary
of the Company).
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute and deliver this
Agreement and to perform its obligations under this Agreement subject only, in the
case of the consummation of the Merger, to approval of the "plan of merger" (as
such term is used in Section 23-1-40 of the IBCL) contained in this Agreement by
the holders of seventy five percent (75%) of the outstanding Shares entitled to
vote on such matter at a shareholders meeting duly called and held for such purpose
(the "Requisite Company Vote"). This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws of general applicability
relating to or affecting creditors rights and to general equity principles (the
"Bankruptcy and Equity Exception").
(ii) The board of directors of the Company has (A) unanimously determined
that the Merger is in the best interests of the Company and its shareholders, unanimously
adopted and declared advisable this Agreement and the Merger and the other transactions
contemplated hereby and unanimously resolved to recommend approval of the "plan
of merger" (as such term is used in Section 23-1-40 of the IBCL) contained in this
Agreement to the holders of Shares (the "Company Board Recommendation"), (B) directed
that this Agreement be submitted to the holders of Shares for their approval of
the "plan of merger" contained in this Agreement at a shareholders meeting duly
called and held for such purpose, (C) received the opinion of its financial advisor,
Morgan Stanley & Co. Incorporated, to the effect that the consideration to be received
by the holders of the Shares in the Merger is fair from a financial point of view,
as of the date of such opinion, to such holders (the "Opinion"), (D) assuming that
Parent, Merger Sub and their respective affiliates collectively beneficially own
less than 10% of the outstanding Shares, taken all necessary steps to render Section
23-1-43 of the IBCL inapplicable to Parent and Merger Sub and to the Merger, and
(E) resolved to elect, to the extent permitted by Law, for the Company not to be
subject to any Takeover Statute. It is agreed and understood that the Opinion is
for the benefit of the Companys board of directors and may not be relied on by
Parent or Merger Sub.
(d) Governmental Filings; No Violations; Certain Contracts.
(i) Other than the filings and/or notices (A) pursuant to Section
1.3, (B) under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended
(the "HSR Act"), (C) under Council Regulation (EC) No 139/2004 (the "ECMR"), and
any other applicable foreign merger control laws, (D) under the Exchange Act, (E)
under the rules of the NASDAQ and (F) required to be or customarily filed pursuant
to any state environmental transfer statutes (the "Company Approvals"), no notices,
reports or other filings are required to be made by the Company with, nor are any
consents, registrations, approvals, permits or authorizations required to be obtained
by the Company from, any domestic or foreign governmental or regulatory authority,
agency, commission, body, court or other legislative, executive or judicial governmental
entity (each a "Governmental Entity"), in connection with the execution, delivery
and performance of this Agreement by the Company and the consummation of the Merger
and the other transactions contemplated hereby, except those that the failure to
make or obtain would not, individually or in the aggregate, have a Company Material
Adverse Effect or prevent, materially delay or materially impair the consummation
of the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
the Company do not, and the consummation of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, the articles of incorporation or bylaws of the Company or
the comparable governing instruments of any of its Significant Subsidiaries, (B)
with or without notice, lapse of time or both, a breach or violation of, a termination
(or right of termination) or a default under, the creation or acceleration of any
obligations or the creation of a Lien on any of the assets of the Company or any
of its Significant Subsidiaries pursuant to any material agreement, lease, license,
contract, note, mortgage, indenture, arrangement or other obligation (each, a "Contract")
binding upon the Company or any of its Subsidiaries or, (C) assuming compliance
with the matters referred to in Section 5.1(d)(i), a violation of any Law to which
the Company or any of its Subsidiaries is subject, except, in the case of clause
(B) or (C) above, for any such breach, violation, termination, default, creation,
acceleration or change that would not, individually or in the aggregate, have a
Company Material Adverse Effect or prevent, materially delay or materially impair
the consummation of the transactions contemplated by this Agreement.
(e) Company Reports; Financial Statements.
(i) The Company has filed or furnished, as applicable, on a timely
basis all forms, statements, certifications, reports and documents required to be
filed or furnished by it with the Securities Exchange Commission (the "SEC") under
the Exchange Act or the Securities Act of 1933, as amended (the "Securities Act")
since May 31, 2004 (the "Applicable Date") (the forms, statements, certifications,
reports and documents filed or furnished since the Applicable Date and those filed
or furnished subsequent to the date hereof, including any amendments thereto, the
"Company Reports"). Each of the Company Reports, at the time of its filing or being
furnished complied or, if not yet filed or furnished, will comply in all material
respects with the applicable requirements of the Securities Act, the Exchange Act
and the Sarbanes-Oxley Act of 2002, and any rules and regulations promulgated thereunder
applicable to the Company Reports. As of their respective dates (or, if amended
prior to the date hereof, as of the date of such amendment), the Company Reports
did not, and any Company Reports filed or furnished with the SEC subsequent to the
date hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not misleading.
(ii) The Company is in compliance in all material respects with
the applicable listing and corporate governance rules and regulations of the NASDAQ.
(iii) Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents in all material respects, or, in the
case of Company Reports filed after the date hereof, will fairly present in all
material respects the consolidated financial position of the Company and its consolidated
Subsidiaries as of its date and each of the consolidated statements of operations,
shareholders equity and cash flows included in or incorporated by reference into
the Company Reports (including any related notes and schedules) fairly presents
in all material respects, or in the case of Company Reports filed after the date
hereof, will fairly present in all material respects the consolidated results of
operations, retained earnings and changes in financial position, as the case may
be, of the Company and its consolidated Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to the absence of information or
notes not required by GAAP to be included in interim financial statements and to
normal year-end adjustments), and in each case have been prepared in accordance
with U.S. generally accepted accounting principles ("GAAP") applied on a consistent
basis, except as may be noted therein.
(iv) The Company and its Subsidiaries have implemented and maintain a system
of internal accounting controls and financial reporting (as required by Rule 13a-15(a)
under the Exchange Act) that are sufficient to provide reasonable assurances regarding
the reliability of financial reporting and the preparation of financial statements
in accordance with GAAP. The Company maintains disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company is recorded and reported on a timely basis to the individuals responsible
for the preparation of the Companys filings with the SEC and other public disclosure
documents. The Company has disclosed, based on its most recent evaluation prior
to the date of this Agreement, to the Companys outside auditors and the audit committee
of the board of directors of the Company (A) any significant deficiencies and material
weaknesses in the design or operation of its internal controls over financial reporting
(as defined in Rule 13a-15(f) of the Exchange Act) that would be reasonably likely
to materially and adversely affect the Companys ability to record, process, summarize
and report financial information and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the Companys
internal controls over financial reporting
(f) Absence of Certain Changes. Since May 31, 2006 there has not been a Company
Material Adverse Effect. Since August 31, 2006 through the date of this Agreement,
the Company and its Subsidiaries have conducted their respective businesses only
in, and have not engaged in any transaction other than according to, the ordinary
and usual course of such businesses and there has not been:
(i) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company or
any of its Subsidiaries (except for dividends or other distributions by any direct
or indirect wholly owned Subsidiary to the Company or to any wholly owned Subsidiary
of the Company);
(ii) any material change in any method of accounting or accounting
practice by the Company or any of its Subsidiaries, except as may be appropriate
to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory
requirements with respect thereto;
(iii) any redemption, repurchase or other acquisition
of any shares of capital stock of the Company or of any of its Subsidiaries;
(iv) any (A) grant or provision for severance or termination payments
or benefits to any director or officer of the Company (the "Elected Officers") or
employee, independent contractor or consultant of the Company or any of its Subsidiaries,
except, in the case of employees who are not Elected Officers, in the ordinary course
of business consistent with past practice, (B) increase in the compensation, perquisites
or benefits payable to any director, Elected Officer, employee, independent contractor
or consultant of the Company or any of its Subsidiaries, except, in the case of
employees who are not Elected Officers of the Company, increases in base salary
in the ordinary course of business consistent with past practice, (C) grant of equity
or equity-based awards that may be settled in Shares, preferred shares or any other
securities of the Company or any of its Subsidiaries or the value of which is linked
directly or indirectly, in whole or in part, to the price or value of any Shares,
preferred shares or other Company securities or Subsidiary securities, (D) acceleration
in the vesting or payment of compensation payable or benefits provided or to become
payable or provided to any current or former director, officer, employee, independent
contractor or consultant, (E) change in the terms of any outstanding Company Option,
or (F) establishment or adoption of any new arrangement that would be a Benefit
Plan or terminate or materially amend any existing Benefit Plan (other than changes
made in the ordinary course of business consistent with past practice or as may
be necessary to comply with applicable Laws, in either case that do not materially
increase the costs of any such Benefit Plans); or
(v) any material Tax election made or revoked by the Company
or any of its Subsidiaries or any settlement or compromise of any material Tax liability
made by the Company or any of its Subsidiaries.
(g) Litigation and Liabilities.
(i) There are no civil, criminal or administrative actions, suits,
claims, hearings, arbitrations, investigations, inquiries or other proceedings pending
or, to the Knowledge of the Company, threatened against the Company or any of its
Subsidiaries, which would, individually or in the aggregate, have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to or
subject to the provisions of any judgment, order, writ, injunction, decree or award
of any Governmental Entity which would, individually or in the aggregate, have a
Company Material Adverse Effect.
(ii) Neither the Company nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or otherwise),
whether or not required by GAAP to be set forth on a consolidated balance sheet
of the Company and its Subsidiaries or in the notes thereto, other than liabilities
and obligations (A) set forth in the Companys consolidated balance sheet as
of May 31, 2006 included in the Company Reports, (B) incurred in the ordinary
course of business consistent with past practice since May 31, 2006, (C) incurred
in connection with the Merger or the transactions contemplated by this Agreement,
or (D) that would not, individually or in the aggregate, have a Company Material
Adverse Effect.
The term "Knowledge" when used in this Agreement with respect
to the Company shall mean the actual knowledge of those persons set forth in
Section 5.1(g) of the Company Disclosure Letter without obligation of any further
review or inquiry, and does not include information of which they may be deemed
to have constructive knowledge only.
(h) Employee Benefits.
(i) All material employee benefit plans covering current or
former officers, directors, employees of the Company or its Subsidiaries (collectively,
the "Employees") or current or former independent contractors or consultants
of the Company or its Subsidiaries, or under which there is a financial obligation
of the Company or any of its Subsidiaries, including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not subject to ERISA, and deferred compensation, stock option, stock purchase, stock appreciation
rights, other stock or stock based, incentive and bonus, change in control,
salary continuation, termination or severance plan, program, policy, practice,
arrangement or agreement or other material employment agreement (the "Benefits
Plans"), other than Benefit Plans maintained outside of the United States primarily
for the benefit of Employees working outside of the United States (such plans
hereinafter being referred to as "Non-U.S. Benefit Plans"), are listed in Section
5.1(h)(i) of the Company Disclosure Letter. True and complete copies of all
Benefit Plans listed in Section 5.1(h)(i) of the Company Disclosure Letter have
been made available to Parent.
(ii) Except for such matters that would not, individually or
in the aggregate, have a Company Material Adverse Effect:
(A) all Benefits Plans, other than "multiemployer plans" within the meaning
of Section 3(37) of ERISA (each, a "Multiemployer Plan") and Non U.S. Benefit
Plans, (collectively, "U.S. Benefit Plans"), have been established, maintained
and operated in compliance with their terms, ERISA, the Code and all other applicable
Laws and each U.S. Benefit Plan that is intended to qualify under Section 401
of the Code has received a favorable determination letter from the Internal
Revenue Service or may rely on a favorable opinion letter issued by the Internal
Revenue Service and, to the Knowledge of the Company, nothing has occurred since
the date of such letter that has or is likely to adversely affect such qualification;
(B) neither the Company nor any of its Subsidiaries has engaged in a transaction
that, assuming the taxable period of such transaction expired as of the date
hereof, could subject the Company or any Subsidiary to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA or any other similar
provision of non-U.S. Law;
(C) neither the Company nor any of its Subsidiaries has or is expected to
incur any liability under Title IV of ERISA with respect to any "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, any Multiemployer
Plan or any "multiple employer plan", within the meaning of Section 4063/4064
of ERISA or section 413(c) of the Code, in each case currently or formerly maintained
or contributed to by any of them or any other entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA Affiliate";
(D) the Company and its Subsidiaries do not have any unsatisfied withdrawal
liability with respect to a Multiemployer Plan under Subtitle E of Title IV
of ERISA;
(E) all Non-U.S. Benefit Plans have been established, maintained and operated
in compliance with their terms and all applicable Laws and each Non-U.S. Benefit
Plan intended to qualify for favorable tax treatment outside the United States
is so qualified; and
(F) All Non-U.S. Benefit Plans are listed in Section 5.1(h)(ii)(F) of the
Company Disclosure Letter. The Company has made available true and complete
summaries of all material Non-U.S. Benefit Plans.
(i) Compliance with Laws; Licenses. The businesses of each of the Company
and its Subsidiaries have not been since the Applicable Date, and are not being,
conducted in violation of any federal, state, local or foreign law, statute
or ordinance, common law, or any rule, regulation, standard, judgment, order,
writ, injunction, decree, arbitration award, agency requirement, license or
permit of any Governmental Entity (collectively, "Laws"), except for violations
that would not, individually or in the aggregate, have a Company Material Adverse
Effect. Except with respect to regulatory matters covered by Section 6.5, no
investigation by any Governmental Entity with respect to the Company or any
of its Subsidiaries or any Benefit Plan is pending or, to the Knowledge of the
Company, threatened except for those the outcome of which would not, individually
or in the aggregate, have a Company Material Adverse Effect. The Company and
its Subsidiaries each has obtained and is in compliance with all permits, certifications,
approvals, registrations, consents, authorizations, franchises, variances, exemptions
and orders issued or granted by a Governmental Entity ("Licenses") necessary
to conduct its business as presently conducted, except those the absence of
which would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(j) Takeover Statutes. Assuming that Parent, Merger Sub and their respective
affiliates beneficially own less than 10% of the outstanding Shares, no "fair
price," "moratorium," "control share acquisition" or other similar Indiana anti-takeover
statute or regulation (each, a "Takeover Statute") or any anti-takeover provision
in the Companys articles of incorporation or bylaws is applicable to the Merger
or the other transactions contemplated by this Agreement. The adoption of this
Agreement and the Merger by the Companys board of directors represents all
the actions necessary to render inapplicable to this Agreement, the Merger and
the other transactions contemplated by this Agreement, the restrictions on "business
combinations" (as defined in Section 23-1-43-5 of the ICBL) set forth in Section
23-1-43-18 of the IBCL to the extent, if any, such restrictions would otherwise
be applicable to this Agreement, the Merger, the other transactions contemplated
by this Agreement or to Parent or Merger Sub or any of their Affiliates in connection
therewith.
(k) Rights Agreement. The Company has taken all actions necessary to
redeem all rights outstanding under the Rights Agreement, dated as of December
16, 1999 (as amended September 2, 2002), between the Company and American Stock
Transfer and Trust Company, as successor rights agent (the "Rights Agreement"),
and to cause the Rights Agreement to be rendered inapplicable to this Agreement,
the Merger and the transactions contemplated by this Agreement.
(l) Environmental Matters. Except in each case for such matters that would
not, individually or in the aggregate, have a Company Material Adverse Effect:
(A) to the Knowledge of the Company, the Company and its Subsidiaries have complied
at all times since the Applicable Date with all applicable Environmental Laws;
(B) to the Knowledge of the Company, the Company and its Subsidiaries possess
all permits, licenses, registrations, identification numbers, authorizations
and approvals required under applicable Environmental Laws for the operation
of the business as presently conducted; (C) neither the Company nor any Subsidiary
has received any written claim, notice of violation or citation concerning any
violation or alleged violation of any applicable Environmental Law or concerning
any actual or alleged liability of the Company or any of its Subsidiaries arising
under or pursuant to any Environmental Law, in each case since the Applicable
Date; and (D) there are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits or proceedings pending or, to the Knowledge
of the Company, threatened, concerning noncompliance by, or actual or potential
liability of, the Company or any Subsidiary with any Environmental Law.
As used herein, the term "Environmental Law" means, as currently in effect,
any applicable law, regulation, code, license, permit, order, judgment, decree
or injunction from any Governmental Entity (A) concerning the protection of
the environment, (including air, water, soil and natural resources) or (B) the
use, storage, handling, release or disposal of Hazardous Substances.
As used herein, the term "Hazardous Substance" means any substance presently
listed, defined, designated or classified as hazardous, toxic or radioactive
under any applicable Environmental Law including petroleum and any derivative
or by-products thereof.
(m) Taxes.
(i) The Company and each of its Subsidiaries: (A) have prepared
in good faith and duly and timely filed (taking into account any extension of
time within which to file) all Tax Returns required to be filed by any of them
except where such failures to prepare or file Tax Returns would not, individually
or in the aggregate, have a Company Material Adverse Effect; (B) all such Tax
Returns have been true, correct and complete in all material respects; (C) have
timely paid all Taxes that are shown on all such Tax Returns and withheld all
amounts that the Company or any of its Subsidiaries are obligated to withhold
from amounts owing to any employee, creditor, shareholder, affiliate or third
party, except with respect to matters contested in good faith as to which adequate
reserves have been established on the balance sheet of the Company as of August
31, 2006 in accordance with GAAP and except where such failure to so pay or
remit would not, individually or in the aggregate, have a Company Material Adverse
Effect; and (D) have not waived any statute of limitations with respect to any
material amount of Taxes or agreed to any extension of time with respect to
any material amount of Tax assessment or deficiency.
(ii) The Company and its Subsidiaries have no liability for
any Tax or any portion of a Tax (or any amount calculated with reference to
any portion of a Tax) of any Person other than the Company or its Subsidiaries,
including under Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local or foreign law), as transferee or successor, by contract or
otherwise, except for such amounts as do not, individually or in the aggregate,
have a Company Material Adverse Effect.
(iii) As of the date hereof, there are not
pending or, to the Knowledge of the Company, threatened in writing, any audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters. The Company has made available to Parent true and correct copies of
the United States federal income Tax Returns filed by the Company and its Subsidiaries
for each of the fiscal years ended May 31, 2005 and 2004.
(iv) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying
for tax-free treatment under Section 355 of the Code occurring any time during
the two-year period ending on the date of this Agreement.
(v) Neither the Company nor its Subsidiaries have engaged
in any "listed transaction" as such term is defined in Treasury Regulations
section 1.6011-4 or any similar provision of state, local or foreign tax law.
As used in this Agreement, (A) the term "Tax" (including, with correlative
meaning, the term "Taxes") includes all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
escheat, severances, stamp, payroll, sales, employment, unemployment, disability,
use, property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts and any interest
in respect of such penalties and additions, and (B) the term "Tax Return" includes
all returns and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.
(n) Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining agreement
with a labor union or labor organization, nor are there any U.S. employees of
the Company or any of its Subsidiaries represented by a works council, representative
body or other labor organization, and there are, to the Knowledge of the Company,
no material activities or material proceedings of any labor union, works council,
representative body or other organization to organize any employees of the Company
or any of its Subsidiaries or compel the Company or any of its Subsidiaries
to bargain with any such union, works council or representative body. Neither
the Company nor any of its Subsidiaries is the subject of any material proceeding
asserting that the Company or any of its Subsidiaries has committed an unfair
labor practice or seeking to compel it to bargain with any labor union or labor
organization nor is there pending or, to the Knowledge of the Company, threatened,
nor has there been since the Applicable Date, any labor strike, dispute, walk-out,
work stoppage, slow-down, lockout or any other similar event involving the Company
or any of its Subsidiaries.
(o) Intellectual Property.
(i) To the Knowledge of the Company, (A) the Company and its
Subsidiaries have sufficient rights to use all material Intellectual Property
necessary for the operation of their businesses as presently conducted, and
(B) except as would not have a Company Material Adverse Effect, all of such
rights shall survive unchanged the consummation of the transactions contemplated
by this Agreement. No written claim has been asserted, or to the Knowledge of
the Company threatened, against the Company or its Subsidiaries concerning the
ownership, validity, registerability, enforceability, infringement, use or licensed
right to use any Intellectual Property that would have a Company Material Adverse
Effect. To the Knowledge of the Company, no person is violating any Intellectual
Property owned by the Company except as would not have a Company Material Adverse
Effect.
(ii) For purposes of this Agreement, the following term has
the following meaning:
"Intellectual Property" means all: (A) trademarks, service marks, brand names,
Internet domain names, logos, symbols, trade dress, trade names, and other indicia
of origin, all applications and registrations for the foregoing, and all goodwill
associated therewith and symbolized thereby, including all renewals of same;
(B) inventions and discoveries, and all patents, registrations, invention disclosures
and applications therefor, including divisions, continuations, continuations-in-part
and renewal applications, and including renewals, extensions, reexaminations
and reissues; (C) confidential information, trade secrets and know-how, including
processes, schematics, business methods, drawings, prototypes, models, designs,
customer lists and supplier lists; (D) published and unpublished works of authorship
(including, databases and other compilations of information), copyrights therein
and thereto, and registrations and applications therefor, and all renewals,
extensions, restorations and reversions thereof; and (E) all other intellectual
property or proprietary rights.
(p) Insurance. The Company and each of its Subsidiaries is covered
by valid and currently effective insurance policies issued in favor of the Company
or one or more of its Subsidiaries that are customary and adequate for companies
of similar size in the industry and locales in which the Company and its Subsidiaries
operate. All such material fire and casualty, general liability, director and
officer liability, business interruption, product liability and sprinkler and
water damage insurance policies maintained by the Company or any of its Subsidiaries
(collectively, the "Insurance Policies") are in full force and effect and all
premiums due with respect to all Insurance Policies have been paid, with such
exceptions that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(q) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any liability
for any brokerage fees, commissions or finders fees in connection with the Merger
or the other transactions contemplated in this Agreement except that the Company
has employed Morgan Stanley & Co. Incorporated as its financial advisor.
(r) Material Contracts. The Company has made available to Parent true,
correct and complete copies of, all contracts, agreements, commitments, arrangements,
leases (including with respect to personal property) and other instruments to
which the Company or any of its Subsidiaries is a party or by which the Company,
any of its Subsidiaries or any of their respective properties or assets is bound
that (A) contain covenants that which, following the consummation of the Merger,
could restrict the ability of Parent or any of its affiliates as of immediately
prior to the Effective Time to compete or operate in any business or with any
person or in any geographic area, or to sell, supply or distribute any service
or product or to otherwise operate or expand its current or future businesses;
(B) involve any exchange traded, over-the-counter or other swap, cap, floor,
collar, futures contract, forward contract, option or any other derivative financial
instrument; (C) relate to indebtedness for borrowed money or similar obligations;
or (D) involve, since January 1, 2004, the acquisition or disposition, directly
or indirectly (by merger or otherwise), of assets or capital stock or other
equity interests of another person for aggregate consideration under such contract
in excess of $50 million (other than acquisitions or dispositions of assets
in the ordinary course of business, including acquisitions and dispositions
of inventory).
(s) Proxy Statement; Other Filings. The letter to shareholders, notice
of meeting, proxy statement and form of proxy that will be provided to shareholders
of the Company in connection with the Merger (including any amendments or supplements)
and any schedules required to be filed with the SEC in connection therewith
(collectively, the "Proxy Statement"), at the time the Proxy Statement is first
mailed and at the time of the Shareholders Meeting, and any other document to
be filed with the SEC in connection with the Merger (the "Other Filings"), at
the time of its filing with the SEC, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty
is made by the Company with respect to information supplied in writing by Parent,
Merger Sub or any Affiliate of Parent or Merger Sub expressly for inclusion
therein. The Proxy Statement and the Other Filings will comply as to form in
all material respects with the provisions of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder.
(t) Regulatory Compliance.
(i) The Company is conducting its business and operations in
material compliance with the Federal Food, Drug, and Cosmetic Act (the "FD&C
Act"), 21 U.S.C. §301 et. seq., and applicable regulations promulgated thereunder
by the United States Food and Drug Administration (the "FDA") (collectively,
"FDA Law and Regulation"). Each Medical Device, as that term is defined in 21
U.S.C. § 321(h) of the FD&C Act, that is manufactured, tested, distributed and/or
marketed by the Company, is being manufactured, tested, distributed and/or marketed
by the Company in material compliance with applicable FDA Law and Regulation,
including those relating to: (A) good manufacturing practices; (B) regulatory
approvals or clearances to market Medical Devices in the United States; (C)
investigational studies; (D) labeling; (E) record keeping; and (F) filing of
reports to the FDA. The Company has not received any notice or communication
from the FDA alleging material noncompliance with any applicable FDA Law and
Regulation. The Company has no Knowledge of any pending or completed FDA proceedings
seeking the recall, withdrawal, suspension or seizure of any Medical Device
against the Company. To the Knowledge of the Company, the Company is not the
subject of any current enforcement proceedings by the FDA.
(ii) To the Knowledge of the Company, no officer, employee or
agent of the Company has: (A) made any untrue statement of material fact or
fraudulent statement to the FDA or any other Governmental Entity responsible
for FDA Law and Regulation; (B) failed to disclose a material fact required
to be disclosed to the FDA or any other Governmental Entity responsible for
FDA Law and Regulation; or (C) committed an act, made a statement or failed
to make a statement that would reasonably be expected to provide the basis for
the FDA or any other Governmental Entity responsible for FDA Law or Regulation
to invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities," as set forth in 56 Fed.Reg. 46191 (September
10, 1991).
(iii) Except as would not, individually or
in the aggregate, have a Company Material Adverse Effect, neither the Company
nor any of its directors, members, employees, agents, officers or managers has
engaged in any activities which are prohibited under any Law relating to healthcare
regulatory matters, including, without limitation, (a) 42 U.S.C. §§ 1320a-7,
7a and 7b, which are commonly referred to as the "Federal Fraud Statutes"; (b)
42 U.S.C. § 1395nn, which is commonly referred to as the "Stark Statute"; (c)
31 U.S.C. §§ 3729-3733, which is commonly referred to as the "Federal False
Claims Act"; (d) 42 U.S.C. §§ 1320d through 1320d-8 and 42 C.F.R. §§ 160, 162
and 164, which are commonly referred to as the "Health Insurance Portability
and Accountability Act of 1996"; (e) any conduct for which debarment is required
or authorized under 21 U.S.C. § 335a; and (f) any related federal, state or
local statutes or regulations.
(u) Properties. Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, the Company or one of its Subsidiaries
(i) has good title to all the properties and assets reflected in the latest
audited balance sheet included in the Company Reports as being owned by the
Company or one of its Subsidiaries or acquired after the date thereof that are
material to the Companys business on a consolidated basis (except properties
sold or otherwise disposed of since the date thereof in the ordinary course
of business), free and clear of all Liens, except (A) statutory liens securing
payments not yet due, (B) such imperfections or irregularities of title, claims,
liens, charges, security interests, easements, covenants and other restrictions
or encumbrances as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties and (C) mortgages, or deeds of trust, security
interests or other encumbrances on title related to indebtedness reflected on
the consolidated financial statements of the Company, and (ii) is the lessee
of all leasehold estates reflected in the latest audited financial statements
included in the Company Reports or acquired after the date thereof that are
material to its business on a consolidated basis (except for leases that have
expired by their terms since the date thereof or been assigned, terminated or
otherwise disposed of in the ordinary course of business consistent with past
practice) and is in possession of the properties purported to be leased thereunder,
and each such lease is valid without default thereunder by the lessee or, to
the Companys Knowledge, the lessor.
(v) Affiliate Transactions. No executive officer or director of the
Company or any of its Subsidiaries or any person beneficially owning 5% or more
of the Shares is a party to any material Contract with or binding upon the Company
or any of its Subsidiaries or any of their respective properties or assets or
has any material interest in any material property owned by the Company or any
of its Subsidiaries or has engaged in any material transaction with any of the
foregoing within the last twelve months.
5.2. Representations and Warranties of Parent and Merger Sub. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to the Company by Parent prior to entering into this Agreement (the
"Parent Disclosure Letter") (it being agreed that disclosure of any item in
any section or subsection of the Parent Disclosure Letter shall be deemed disclosure
with respect to any other section or subsection to which the relevance of such
item is reasonably apparent), Parent and Merger Sub each hereby represent and
warrant to the Company that:
(a) Organization, Good Standing and Qualification. Each of Parent and
Merger Sub is a legal entity duly organized, validly existing and in good standing
under the Laws of its respective jurisdiction of organization and has all requisite
corporate or similar power and authority to own, lease and operate its properties
and assets and to carry on its business as presently conducted and is qualified
to do business and is in good standing as a foreign corporation in each jurisdiction
where the ownership, leasing or operation of its assets or properties or conduct
of its business requires such qualification, except where the failure to be
so organized, qualified or in such good standing, or to have such power or authority,
would not, individually or in the aggregate, reasonably be expected to prevent,
materially delay or impair the ability of Parent and Merger Sub to consummate
the Merger and the other transactions contemplated by this Agreement. Parent
has made available to the Company a complete and correct copy of the articles
of incorporation and bylaws or comparable governing documents of Parent and
Merger Sub, each as in effect on the date of this Agreement.
(b) Corporate Authority. No further action, vote, consent or approval
of the direct or indirect holders of capital stock of Parent is necessary to
approve this Agreement and the Merger and the other transactions contemplated
hereby. Each of Parent and Merger Sub has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement, subject only to the
adoption of this Agreement by Parent as the sole shareholder of Merger Sub,
which adoption by Parent will occur immediately following execution of this
Agreement, and to consummate the Merger. This Agreement has been duly executed
and delivered by each of Parent and Merger Sub and is a valid and binding agreement
of Parent and Merger Sub, enforceable against each of Parent and Merger Sub
in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(c) Governmental Filings; No Violations; Etc.
(i) Other than the filings and/or notices pursuant to Section
1.3 and under the HSR Act, the ECMR and any other applicable merger control
laws (the "Parent Approvals"), no notices, reports or other filings are required
to be made by Parent or Merger Sub with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Parent or Merger
Sub from, any Governmental Entity in connection with the execution, delivery
and performance of this Agreement by Parent and Merger Sub and the consummation
by Parent and Merger Sub of the Merger and the other transactions contemplated
hereby, except those that the failure to make or obtain would not, individually
or in the aggregate, reasonably be expected to prevent, materially delay or
materially impair the ability of Parent or Merger Sub to consummate the Merger
and the other transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement
by Parent and Merger Sub do not, and the consummation by Parent and Merger Sub
of the Merger and the other transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default under, the articles
of incorporation or bylaws or comparable governing documents of Parent or Merger
Sub or the comparable governing instruments of any of its Subsidiaries, (B)
with or without notice, lapse of time or both, a breach or violation of, a termination
(or right of termination) or a default under, the creation or acceleration of
any obligations or the creation of a Lien on any of the assets of Parent or
any of its Subsidiaries pursuant to, any Contracts binding upon Parent or any
of its Subsidiaries or any Laws or governmental or non-governmental permit or
license to which Parent or any of its Subsidiaries is subject or (C) any change
in the rights or obligations of any party under any of such Contracts, except,
in the case of clause (B) or (C) above, for any breach, violation, termination,
default, creation, acceleration or change that would not, individually or in
the aggregate, reasonably be expected to prevent, materially delay or materially
impair the ability of Parent or Merger Sub to consummate the Merger and the
other transactions contemplated by this Agreement.
(d) Litigation. There are no civil, criminal or administrative actions,
suits, claims, hearings, investigations or proceedings pending or, to the knowledge
of the officers of Parent, threatened against Parent or Merger Sub that seek
to enjoin, or would reasonably be expected to have the effect of preventing,
making illegal, or otherwise interfering with, any of the transactions contemplated
by this Agreement, except as would not, individually or in the aggregate, reasonably
be expected to prevent, materially delay or materially impair the ability of
Parent and Merger Sub to consummate the Merger and the other transactions contemplated
by this Agreement.
(e) Financing. Parent has delivered to the Company (i) true and
complete copies of the commitment letter (as the same may be amended in accordance
with Section 6.13(a)), dated as of the date hereof, between Parent and each
of Banc of America Securities LLC, Banc of America Bridge LLC, Bank of America,
N.A. and Goldman Sachs Credit Partners L.P. (the "Debt Financing Commitment"),
pursuant to which the lenders party thereto have agreed, subject to the terms
and conditions set forth therein, to provide or cause to be provided the debt
amounts set forth therein for the purposes of financing the transactions contemplated
by this Agreement and related fees and expenses (the "Debt Financing") and (ii)
true and complete copies of the equity commitment letters, dated as of the date
hereof, between Parent and each of Blackstone Capital Partners V L.P., Goldman
Sachs Investments Ltd., KKR 2006 Fund L.P. and TPG Partners V, L.P. (collectively,
the "Equity Financing Commitments" and together with the Debt Financing Commitment,
the "Financing Commitments"), pursuant to which each of the investor parties
thereto have committed, subject to the terms and conditions set forth therein,
to invest the amount set forth therein (the "Equity Financing" and together
with the Debt Financing, the "Financing"). None of the Financing Commitments
has been amended or modified prior to the date of this Agreement, no
such amendment or modification is contemplated except as permitted by Section
6.13(a) and, as of the date of the Agreement, the respective commitments contained
in the Financing Commitments have not been withdrawn or rescinded in any material
respect. Parent has fully paid any and all commitment fees or other fees in
connection with the Debt Financing Commitment that are payable on or prior to
the date hereof and, as of the date of this Agreement, the Debt Financing Commitment
is in full force and effect and is the valid, binding and enforceable obligation
of Parent and, to the knowledge of Parent, each other party thereto so long
as it remains in effect. There are no conditions precedent or other contingencies
related to the funding of the full amount of the Financing, other than as set
forth in or contemplated by the Financing Commitments. As of the date of this
Agreement, no event has occurred which, with or without notice, lapse of time
or both, would constitute a default on the part of Parent or Merger Sub under
any of the Financing Commitments, and Parent has no reason to believe that it
will be unable to satisfy any of the conditions to the Financing contemplated
by the Financing Commitments (subject to the Company complying with its obligations
hereunder and assuming that there will not be a Company Material Adverse Effect).
After giving effect to the amounts expected to be funded under the Financing
Commitments, and assuming compliance by the Company with its obligations hereunder,
Parent and Merger Sub will have at the Closing funds sufficient, together with
available cash of the Company, to pay the aggregate Per Share Merger Consideration
(and any repayment or refinancing of debt contemplated by the Financing Commitments)
and any other amounts required to be paid in connection with the consummation
of the transactions contemplated hereby, and to pay all related fees and expenses.
(f) Capitalization of Parent and Merger Sub.
(i) The authorized capital stock of Merger Sub consists solely
of 1,000 shares of common stock, without par value, all of which are validly
issued and outstanding. All of the issued and outstanding capital stock of Merger
Sub is, and at the Effective Time will be, owned by Parent or a direct or indirect
wholly owned Subsidiary of Parent. Merger Sub has not conducted any business
prior to the date hereof and has no, and prior to the Effective Time will have
no, assets, liabilities or obligations of any nature other than those incident
to its formation and pursuant to this Agreement and the Merger, the Financing
Commitments and the other transactions contemplated by this Agreement.
(ii) Parent has delivered to the Company a complete and correct
description of its capital structure and the relative ownership of its equity
holders as of the date of this Agreement (it being understood that Parent may
be converted from a Delaware limited liability company to a Delaware corporation
prior to the Effective Time).
(g) Brokers. No agent, broker, finder or investment banker is entitled
to any brokerage, finders or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Merger Sub for which the Company could have any liability.
(h) Solvency. Assuming that the Company is solvent immediately prior
to the Effective Time and the satisfaction of the conditions to Parents obligation
to consummate the Merger, or waiver of such conditions, and assuming the accuracy
and completeness of the representations and warranties of the Company contained
herein, and after giving effect to the transactions contemplated by this Agreement,
including the Financing, any alternative financing and the payment of the aggregate
Per Share Merger Consideration, any other repayment or refinancing of debt contemplated
in the Financing Commitments, payment of all amounts required to be paid in
connection with the consummation of the transactions contemplated hereby, and
payment of all related fees and expenses, each of Parent and the Surviving Corporation
will be Solvent as of the Effective Time and immediately after the consummation
of the transactions contemplated hereby. For the purposes of this Agreement,
the term "Solvent" when used with respect to any Person, means that, as of any
date of determination, (i) the amount of the "fair saleable value" of the assets
of such Person will, as of such date, exceed (A) the value of all "liabilities
of such Person, including contingent and other liabilities," as of such date,
as such quoted terms are generally determined in accordance with applicable
Laws governing determinations of the insolvency of debtors, and (B) the amount
that will be required to pay the probable liabilities of such Person on its
existing debts (including contingent and other liabilities) as such debts become
absolute and mature, (ii) such Person will not have, as of such date, an unreasonably
small amount of capital for the operation of the businesses in which it is engaged
or proposed to be engaged following such date, and (iii) such Person will be
able to pay its liabilities, including contingent and other liabilities, as
they mature. For purposes of this definition, "not have an unreasonably small
amount of capital for the operation of the businesses in which it is engaged
or proposed to be engaged" and "able to pay its liabilities, including contingent
and other liabilities, as they mature" means that such Person will be able to
generate enough cash from operations, asset dispositions or refinancing, or
a combination thereof, to meet its obligations as they become due.
(i) No Competing Businesses. Except as set forth in Section 5.2(i) of the
Parent Disclosure Letter, Parent is not, nor does it have any affiliates that
are, engaged in the business or businesses of designing, manufacturing or marketing
musculoskeletal products.
(j) Guarantee. Concurrently with the execution of this Agreement, Parent
has caused the Guarantors to deliver to the Company the duly executed Guarantees.
Each of the Guarantees is in full force and effect and is the valid, binding
and enforceable obligation of the respective Guarantor, and no event has occurred,
which, with or without notice, lapse of time or both, would constitute a default
on the part of a Guarantor under its respective Guarantee.
(k) Proxy Statement. None of the information supplied or to be supplied
by Parent or Merger Sub for inclusion or incorporation by reference in the Proxy
Statement will, at the date it is first mailed to the shareholders of the Company
and at the time of the Shareholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing, Parent
and Merger Sub make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained or
incorporated by reference in the Proxy Statement.
(l) Ownership of Shares. As of the date of this Agreement, neither Parent
nor Merger Sub owns (directly or indirectly, beneficially or of record) any
Shares and neither Parent nor Merger Sub holds any rights to acquire any Shares
except pursuant to this Agreement.
ARTICLE VI
Covenants
6.01. Interim Operations.
(a) The Company covenants and agrees as to itself and its Subsidiaries
that, after the date hereof and prior to the Effective Time (unless Parent shall
otherwise approve in writing, such approval not to be unreasonably withheld
or delayed, and except as otherwise expressly contemplated by this Agreement
or as set forth in Section 6.1 of the Company Disclosure Letter) and except
as required by applicable Law, the business of it and its Subsidiaries shall
be conducted in the ordinary and usual course consistent with past practice
and to the extent consistent therewith, it and its Subsidiaries shall use their
respective reasonable best efforts to preserve their business organizations
intact and maintain existing relations and goodwill with Governmental Entities,
customers, suppliers, employees and business associates. Without limiting the
generality of the foregoing and in furtherance thereof, from the date of this
Agreement until the Effective Time, except (i) as otherwise contemplated by
this Agreement, (ii) as Parent may approve in writing (such approval not to
be unreasonably withheld or delayed), (iii) as is required by applicable Law
or any Governmental Entity or (iv) as set forth in Section 6.1 of the Company
Disclosure Letter, the Company will not and will not permit its Subsidiaries
to:
(A) adopt or propose any change in its articles of incorporation or bylaws
or other applicable governing instruments;
(B) merge or consolidate the Company or any of its Subsidiaries with any
other Person, except for any such transactions among wholly owned Subsidiaries
of the Company, or restructure, reorganize or completely or partially liquidate;
(C) acquire assets outside of the ordinary course of business from any other
Person with a value or purchase price in the aggregate in excess of $15 million
in any transaction or series of related transactions, other than acquisitions
pursuant to Contracts in effect as of the date of this Agreement;
(D) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize
the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee
or encumbrance of, any shares of capital stock of the Company or any of its
Subsidiaries (other than (1) the issuance of Shares upon the exercise of Company
Options or (2) the issuance of shares by a wholly owned Subsidiary of the Company
to the Company or another wholly owned Subsidiary), or securities convertible
or exchangeable into or exercisable for any shares of such capital stock, or
any options, warrants or other rights of any kind to acquire any shares of such
capital stock or such convertible or exchangeable securities;
(E) make any loans, advances or capital contributions to or investments in
any Person (other than the Company or any direct or indirect wholly owned Subsidiary
of the Company) in excess of $15 million in the aggregate;
(F) declare, set aside, make or pay any dividend or other distribution, payable
in cash, stock, property or otherwise, with respect to any of its capital stock
(except for (1) the Companys regular annual dividend for calendar year 2007,
payable in an amount not in excess of $0.35 per Share (the "2007 Regular Dividend");
provided that the record date for the 2007 Regular Dividend shall be no earlier
than July 14, 2007, and that the 2007 Regular Dividend shall not be paid if
the Effective Time occurs on or prior to such record date, and (ii) dividends
paid by any direct or indirect wholly owned Subsidiary to the Company or to
any other direct or indirect wholly owned Subsidiary) or enter into any agreement
with respect to the voting of its capital stock;
(G) reclassify,
split, combine, subdivide or redeem, purchase or otherwise acquire, directly
or indirectly, any of its capital stock or securities convertible or exchangeable
into or exercisable for any shares of its capital stock (other than the acquisition
of any Shares tendered by current or former employees or directors in connection
with the exercise of Company Options);
(H) incur any indebtedness for borrowed money or guarantee
such indebtedness of another Person (other than a wholly owned Subsidiary of
the Company), or issue or sell any debt securities or warrants or other rights
to acquire any debt security of the Company or any of its Subsidiaries, except
for indebtedness for borrowed money incurred in the ordinary course of business;
(I) except as set forth in the capital budgets set forth in Section
6.1(a)(I) of the Company Disclosure Letter, make or authorize any capital expenditure
in excess of $15 million in the aggregate;
(J) make any material changes with respect to accounting policies or
procedures, except as required by changes in GAAP or Law or by a Governmental
Entity or as required to address Option Accounting Issues;
(K) settle any litigation or other proceedings before a Governmental Entity
or otherwise for an amount in excess of $10 million or any obligation or liability
of the Company in excess of such amount;
(L) make or change any material Tax election or tax accounting method, or
settle or compromise any material Tax liability other than in the ordinary course
of business consistent with past practice;
(M) transfer, sell, lease, license, mortgage, pledge, surrender,
encumber, divest, cancel, abandon or otherwise dispose of any assets, product
lines or businesses of the Company or its Subsidiaries, including capital stock
of any of its Subsidiaries, in each case which are material to the Company and
its Subsidiaries taken as a whole, other than inventory, supplies and other
assets in the ordinary course of business and other than pursuant to Contracts
in effect prior to the date of this Agreement;
(N) except as expressly contemplated by this Agreement, required pursuant
to Benefit Plans in effect prior to the date of this Agreement and listed on
the Companys Disclosure Letter, or as otherwise required by applicable Law,
(1) grant or provide any severance or termination payments or benefits to any
current or former director, Elected Officer or employee of the Company or any
of its Subsidiaries, except, in the case of employees who are not Elected Officers,
in the ordinary course of business consistent with past practice, (2) increase
the compensation, perquisites or benefits payable to any current or former director,
Elected Officer or employee of the Company or any of its Subsidiaries, except,
in the case of employees who are not Elected Officers of the Company, increases
in base salary in the ordinary course of business consistent with past practice,
(3) grant any equity or equity-based awards that may be settled in Shares, preferred
shares or any other securities of the Company or any of its Subsidiaries or
the value of which is linked directly or indirectly, in whole or in part, to
the price or value of any Shares, preferred shares or other Company securities
or Subsidiary securities, (4) accelerate the vesting or payment of any compensation
payable or benefits provided or to become payable or provided to any current
or former director, Elected Officer or employee; provided that notwithstanding
the foregoing, the Company shall be permitted, at any time prior to the Effective
Time, to pay any annual or quarterly bonus earned and determined in the ordinary
course earlier than it would otherwise have been paid in order to pay such amount
in the calendar year prior to the calendar year in which it would otherwise
have been paid, regardless of when such bonus payments have historically been
paid or (5) terminate or materially amend any existing, or adopt any new, Benefit
Plan (other than changes made in the ordinary course of business consistent
with past practice or as may be necessary to comply with applicable Laws, in
either case that do not materially increase the costs of any such Benefit Plans);
(O) enter into, amend or extend any material collective
bargaining agreement or other labor agreement;
(P) except to the extent necessary to take any actions that the Company is
otherwise permitted to take pursuant to Section 6.2 (and in such case only in
accordance with the terms of Section 6.2), take any action to render inapplicable,
or to exempt any third party from, any standstill arrangements or the provisions
of any Takeover Statutes;
(Q) enter into, amend or modify any agreement of the type
described in Section 5.1(r); or
(R) except as provided in Section 6.2 and Section 8.3(a), agree, authorize
or commit to do any of the foregoing.
(b) Notwithstanding anything to the contrary in the foregoing, the
parties shall work together in good faith to agree upon actions intended to
ameliorate, to the extent reasonably practicable, any adverse tax impact imposed
under Section 409A of the Code to employees arising out of or related to Option
Accounting Issues.
(c) The Company shall consult with Parent reasonably in advance of
any decision to (i) hire any "Executive Officer" (as such term is defined in
Rule 3b-7 promulgated under the Exchange Act), promote any existing Executive
Officer to a more senior position or otherwise appoint or promote any current
director, employee, independent contractor or consultant to an Executive Officer
position or (ii) adopt any material modification or material deviation from
the Companys three-year operating plan, as previously provided to Parent; and
in each case shall consider in good faith the reasonable recommendations of
Parent in connection therewith.
(d) The Company will use its reasonable best efforts to conclude its
internal investigation regarding the Companys practices with respect to the
issuance of stock options and to complete, if required, any restatement of the
Companys financial statements, in each case as promptly as reasonably practicable
after the date hereof, and shall keep Parent informed, on a current basis, of
the status with respect thereto and with respect to any other investigation
or litigation relating directly to Option Accounting Issues.
(e) The Company shall, except as prohibited by applicable Law or as
would jeopardize attorney-client privilege (but in such event, the Company will
use its commercially reasonable efforts to keep Parent fully informed), keep
Parent informed, on a current basis, of any material events, discussions, notices
or changes with respect to any criminal or regulatory investigation or action
involving the Company or any of its Subsidiaries.
6.2. Acquisition Proposals.
(a) No Solicitation or Negotiation. The Company agrees that, except
as expressly permitted by this Section 6.2, neither it nor any of its Subsidiaries
nor any of the Elected Officers and directors of it or its Subsidiaries shall,
and that it shall use its reasonable best efforts to cause its and its Subsidiaries
employees, investment bankers, attorneys, accountants and other advisors or
representatives (such directors, officers, employees, investment bankers, attorneys,
accountants and other advisors or representatives, collectively, "Representatives")
not to, directly or indirectly:
(i) initiate, solicit or knowingly encourage or facilitate any
inquiries or the making of any inquiry, proposal or offer that constitutes or
may reasonably be expected to lead to an Acquisition Proposal; or
(ii) engage in any discussions or negotiations regarding, or
provide any information or data to any Person relating to, any Acquisition Proposal.
Notwithstanding anything in the foregoing to the contrary, prior to the time,
but not after, the Requisite Company Vote is obtained, the Company may (A) provide
information or data in response to a request therefor by a Person who has made
an unsolicited bona fide written Acquisition Proposal if (x) the Company receives
from the Person so requesting such information an executed confidentiality agreement
on terms that are no less favorable (including with respect to standstill provisions)
than those contained in the confidentiality agreements signed by certain affiliates
of Parent and (y) the Company substantially concurrently provides to Parent
any non-public information provided to such Person which was not previously
provided to Parent; or (B) engage or participate in any discussions or negotiations
with any Person who has made such an unsolicited bona fide written Acquisition
Proposal; if and only to the extent that, (1) the Company has not breached this
Section 6.2 with respect to such Acquisition Proposal, (2) prior to taking any
action described in clause (A) or (B) above, the board of directors of the Company
determines in good faith after consultation with outside legal counsel that
failure to take such action would be inconsistent with the directors fiduciary
duties under applicable Law, and (3) in each such case referred to in clause
(A) or (B) above, the board of directors of the Company has determined in good
faith based on the information then available and after consultation with its
financial advisor and legal counsel that either (i) such Acquisition Proposal
constitutes a Superior Proposal or (ii) there is a reasonable likelihood that
such Acquisition Proposal will result in a Superior Proposal.
(b) Definitions. For purposes of this Agreement:
"Acquisition Proposal" means (i) any proposal or offer with respect to a
merger, joint venture, partnership, consolidation, dissolution, liquidation,
tender offer, recapitalization, reorganization, share exchange, business combination
or similar transaction or (ii) any other direct or indirect acquisition, in
the case of clause (i) or (ii), involving 15% or more of the total voting power
or of any class of equity securities of the Company, or 15% or more of the consolidated
total assets (including equity securities of its Subsidiaries) of the Company,
in each case other than the transactions contemplated by this Agreement.
"Superior Proposal" means an unsolicited bona fide Acquisition Proposal involving
more than 50% of the assets (on a consolidated basis) or total voting power
of the equity securities of the Company that the board of directors of the Company
has determined in its good faith judgment (after consultation with its financial
advisor and outside legal counsel) is reasonably likely to be consummated, taking
into account all legal, financial, regulatory, timing and other aspects of the
proposal and the Person making the proposal, and would, if consummated, result
in a transaction superior to the Company than the transaction contemplated by
this Agreement.
(c) No Change in Recommendation or Alternative Acquisition Agreement.
The board of directors of the Company shall not:
(i) withhold, withdraw, qualify or modify (or publicly propose
or resolve to withhold, withdraw, qualify or modify), in a manner adverse to
Parent, the Company Board Recommendation with respect to the Merger; or
(ii) approve or recommend, or publicly propose to approve or
recommend, an Acquisition Proposal or cause or permit the Company to enter into
any acquisition agreement, merger agreement, letter of intent or other similar
agreement relating to an Acquisition Proposal or enter into any agreement requiring
the Company to abandon, terminate or fail to consummate the transactions contemplated
hereby or resolve, propose or agree to do any of the foregoing.
Notwithstanding anything to the contrary set forth in this Section 6.2(c),
prior to the time, but not after, the Requisite Company Vote is obtained, if
the Company receives an Acquisition Proposal which the board of directors of
the Company concludes in good faith after consultation with outside legal counsel
and its financial advisors constitutes a Superior Proposal after giving effect
to all of the adjustments to the terms of this Agreement which may be offered
by Parent including pursuant to this Section 6.2(c), the board of directors
of the Company may at any time prior to obtaining the Requisite Shareholder
Vote, if it determines in good faith, after consultation with outside counsel,
that failure to do so would be inconsistent with its fiduciary duties under
applicable Law, (x) withhold, withdraw or qualify or modify, or propose publicly
to withhold, withdraw, qualify or modify, in a manner adverse to Parent or Merger
Sub, the Company Recommendation (a "Change in Recommendation") and/or (y) terminate
this Agreement to enter into a definitive agreement with respect to such Superior
Proposal; provided that the Company shall not terminate this Agreement pursuant
to the foregoing clause (y), and any purported termination pursuant to the foregoing
clause (y) shall be void and of no force or effect, unless in advance of or
concurrently with such termination the Company pays the Termination Fee, as
required by Section 8.5(b); and provided, further that the board of directors
of the Company may not withdraw, modify or amend the Company Board Recommendation
in a manner adverse to Parent pursuant to the foregoing clause (x) or terminate
this Agreement pursuant to the foregoing clause (y) unless (A) the Company shall
not have breached this Section 6.2 with respect to such Superior Proposal and
(B) the Company shall have provided prior written notice to Parent, at least
five business days (or three business days in the event of each subsequent material
revision to such Superior Proposal) in advance (the "Notice Period"), of its
intention to take such action with respect to such Superior Proposal, which
notice shall specify the material terms and conditions of any such Superior
Proposal (including the identity of the party making such Superior Proposal),
and, if available, shall have contemporaneously provided a copy of the proposed
definitive transaction agreement with the party making such Superior Proposal
and other material related documents (the "Alternative Acquisition Agreement");
and (C) prior to effecting such Change of Board Recommendation or terminating
this Agreement to enter into a definitive agreement with respect to such Superior
Proposal, the Company shall, and shall cause its financial and legal advisors
to, during the Notice Period, negotiate with Parent in good faith (to the extent
Parent desires to negotiate) to make such adjustments in the terms and conditions
of this Agreement so that such Acquisition Proposal ceases to constitute a Superior
Proposal. In the event of any material revisions to the Superior Proposal, the
Company shall be required to deliver a new written notice to Parent and to comply
with the requirements of this Section 6.2(c) with respect to such new written
notice.
(d) Certain Permitted Disclosure. Nothing contained in this Section
6.2 shall be deemed to prohibit the Company or the board of directors of the
Company from complying with its disclosure obligations under U.S. federal or
state Law with regard to an Acquisition Proposal, including taking and disclosing
to its shareholders a position contemplated by Rule 14d-9 and Rule 14e-2(a)
promulgated under the Exchange Act (or any similar communication to shareholders),
provided that any disclosure other than a "stop-look-and-listen" communication
to the shareholders of the Company pursuant to Rule 14d-9(f) promulgated under
the Exchange Act (or any similar communications to the shareholders of the Company)
shall be deemed to be a "Change in Recommendation" unless the Companys board
(i) expressly rejects the applicable Acquisition Proposal or (ii) expressly
reaffirms its recommendation to its shareholders in favor of the Merger.
(e) Notice. The Company agrees that, in addition to the other obligations
of the Company set forth in this Section 6.2, it will promptly notify Parent
orally and in writing of its receipt of any Acquisition Proposal by indicating,
in connection with such notice, the material terms and conditions thereof and
the identity of the Person making any such Acquisition Proposal, and thereafter
shall keep Parent reasonably informed, on a prompt basis, of the status and
terms of any such Acquisition Proposal (including any amendments thereto).
(f) Breaches by Representatives. The Company agrees that any material violation
of the restrictions set forth in this Section 6.2 by any of its Representatives
shall be deemed to be a breach of this Section 6.2 by the Company.
6.3. Proxy Statement. The Company shall prepare and file the Proxy Statement
in preliminary form with the SEC as promptly as practicable after the date of
this Agreement, but in any event by January 31, 2006. The Company will provide
to Parent a reasonable opportunity to review and comment upon the Proxy Statement,
or any amendments or supplements thereto, prior to filing the same with the
SEC. The Company agrees, as to itself and its Subsidiaries, that at the date
of mailing to shareholders of the Company and at the time of the Shareholders
Meeting, (a) the Proxy Statement will comply in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations thereunder
and (b) none of the information supplied by it or any of its Subsidiaries for
inclusion or incorporation by reference in the Proxy Statement will contain
any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
6.4. Shareholders Meeting. The Company, acting through its board of directors,
shall take, in accordance with applicable Law and its articles of incorporation
and bylaws, all reasonable action necessary to convene a meeting of holders
of Shares (the "Shareholders Meeting") as promptly as reasonably practicable
after the execution of this Agreement to consider and vote upon the approval
of the "plan of merger" (as such term is used in Section 23-1-40 of the IBCL)
contained in this Agreement. Except in the event of a Change in Recommendation
permitted by Section 6.2(c), (a) the Proxy Statement shall include the Company
Board Recommendation and (b) the board of directors of the Company shall take
all reasonable lawful action to solicit the Requisite Company Vote. Unless this
Agreement is validly terminated in accordance with its terms pursuant to ARTICLE
VIII, the Company shall submit this Agreement to its shareholders at the Shareholders
Meeting even if its board of directors shall have withdrawn, modified or qualified
its recommendation thereof or otherwise effected a Change in Recommendation
or proposed or announced any intention to do so.
6.5. Filings; Other Actions; Notification.
(a) Proxy Statement. The Company shall as soon as reasonably practicable
notify Parent of the receipt of all comments of the SEC with respect to the
Proxy Statement and of any request by the SEC for any amendment or supplement
thereto or for additional information and shall as soon as reasonably practicable
provide to Parent copies of all material correspondence between the Company
and/or any of its Representatives on the one hand, and the SEC, on the other
hand, with respect to the Proxy Statement. The Company and Parent shall each
use its reasonable best efforts to promptly provide responses to the SEC with
respect to all comments received on the Proxy Statement by the SEC and the Company
shall cause the definitive Proxy Statement to be mailed promptly after the date
the SEC staff advises that it has no further comments thereon or that the Company
may commence mailing the Proxy Statement. Subject to applicable Laws, the Company
and Parent (with respect to itself and Merger Sub) each shall, upon request
by the other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as
may be reasonably necessary or advisable in connection with the Proxy Statement
or any other statement, filing, notice or application made by or on behalf of
Parent, the Company or any of their respective Subsidiaries to any third party
and/or any Governmental Entity in connection with the Merger and the transactions
contemplated by this Agreement.
(b) Cooperation. Subject to the terms and conditions set forth in this
Agreement, the Company and Parent shall cooperate with each other and use (and
shall cause their respective Subsidiaries to use) their respective reasonable
best efforts to take or cause to be taken all actions, and do or cause to be
done all things reasonably necessary, proper or advisable on its part under
this Agreement and applicable Laws to consummate and make effective the Merger
and the other transactions contemplated by this Agreement as soon as practicable,
including preparing and filing as promptly as practicable all documentation
to effect all necessary notices, reports and other filings and to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement. In connection with and without
limiting the foregoing, the Company and Parent shall each file or jointly file,
if applicable, or cause to be filed, promptly after the date of this Agreement,
any notifications, approval applications or the like required to be filed under
the HSR Act and all other merger control laws with respect to the transactions
contemplated hereby and Parent shall pay all filing and similar fees and related
expenses payable in connection therewith. The Company and Parent shall ensure
their respective filings under the HSR Act are made within twenty business days
after the date of this Agreement. The Company and Parent will each request early
termination of the waiting period with respect to the Merger under the HSR Act.
Subject to applicable Laws relating to the exchange of information, Parent and
the Company shall have the right to review in advance, and to the extent practicable
each will consult with the other on and consider in good faith the views of
the other in connection with, all of the information relating to Parent or the
Company, as the case may be, and any of their respective Subsidiaries, that
appears in any filing made with, or written materials submitted to, any third
party and/or any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement (including the Proxy Statement and
material information, if any, provided to unions, works councils or other representative
bodies or labor organizations). Parent shall keep the Company apprised of any
material changes in its capital structure or in the relative ownership of the
Guarantors. In exercising the foregoing rights, each of the Company and Parent
shall act reasonably and as promptly as practicable.
(c) Status. Subject to applicable Laws and the instructions of any
Governmental Entity, the Company and Parent each shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any
of its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
Neither the Company nor Parent shall permit any of its officers or any other
Representatives to participate in any meeting with any Governmental Entity in
respect of any filings, investigation or other inquiry in each case relating
solely to the Merger and the transactions contemplated hereby unless it consults
with the other party in advance and, to the extent permitted by such Governmental
Entity, gives the other party the opportunity to attend and participate therein.
(d) Merger Clearance. Subject to the terms and conditions set forth
in this Agreement, without limiting the generality of the undertakings pursuant
to this Section 6.5, Parent and the Company agree to take or cause to be taken
the following actions:
(i) the prompt use of their respective reasonable best efforts
to avoid the entry of any permanent, preliminary or temporary injunction or
other order, decree, decision, determination or judgment that would restrain,
prevent, enjoin or otherwise prohibit consummation of the transactions contemplated
by this Agreement, including the proffer (and agreement) by Parent of its willingness
to sell or otherwise dispose of, or hold separate pending such disposition,
and promptly to effect the sale, disposal and holding separate of, such assets,
categories of assets or businesses or other segments of the Company after the
occurrence of the Effective Time and/or Parent or eithers respective Subsidiaries
(in the case of the Company, after the occurrence of the Effective Time) (and
the entry into agreements with, and submission to orders of, the relevant federal,
state, local or foreign court or Governmental Entity with jurisdiction over
enforcement of any applicable antitrust or competition Laws ("Government Antitrust
Entity") giving effect thereto), if such action should be necessary to avoid,
prevent, eliminate or remove the actual, anticipated or threatened (A) commencement
of any administrative, judicial or other proceeding in any forum by any Government
Antitrust Entity or (B) issuance of any order, decree, decision, determination
or judgment that would restrain, prevent, enjoin or otherwise prohibit consummation
of the Merger by any Government Antitrust Entity; and
(ii) the prompt use of their respective reasonable best efforts,
in the event that any permanent, preliminary or temporary injunction, decision,
order, judgment, determination or decree is entered or issued, or becomes reasonably
foreseeable or threatened to be entered or issued, in any proceeding, review
or inquiry of any kind that would make consummation of the Merger in accordance
with the terms of this Agreement unlawful or that would delay, restrain, prevent,
enjoin or otherwise prohibit consummation of the Merger or the other transactions
contemplated by this Agreement, to resist, vacate, modify, reverse, suspend,
prevent, eliminate, avoid or remove such actual, anticipated or threatened injunction,
decision, order, judgment, determination or decree so as to permit such consummation
on the schedule contemplated by this Agreement.
6.6. Access and Reports.
(a) Access. Subject to applicable Law, upon reasonable notice, the
Company shall (and shall cause its Subsidiaries to) afford Parents officers
and other authorized Representatives reasonable access, during normal business
hours throughout the period prior to the Effective Time, to its employees, properties,
books, contracts and records and, during such period, the Company shall (and
shall cause its Subsidiaries to) furnish promptly to Parent all information
concerning its business, properties and personnel as may reasonably be requested;
provided that no investigation pursuant to this Section 6.6 shall affect or
be deemed to modify any representation or warranty made by the Company herein;
provided further that the foregoing shall not require the Company (a) to permit
any inspection, or to disclose any information, that in the reasonable judgment
of the Company would result in the |
